FX.co ★ UK 10-Year Gilt Yield Follow US Treasuries Higher

The yield on the UK 10-year gilt increased to 4.69% amid a global bond selloff sparked by renewed concerns over the stability of US fiscal policies. This movement echoed the upward trend in US Treasury yields, further intensified by Moody's downgrading of the US government's credit rating. The downgrade was attributed to rising deficits and ongoing political gridlock. On the domestic front, investor sentiment was also impacted by a significant development in UK-EU relations, as negotiators concluded a deal featuring a defense and security pact and cooperation on key geopolitical issues, such as the conflict in Ukraine. Although the draft still requires formal ratification, this progress has been noteworthy. Looking ahead, market participants are focused on Thursday’s flash Purchasing Managers' Index (PMI) data, with predictions indicating a modest decline in manufacturing and a minor contraction in services. Additionally, forecasts for April suggest inflation will climb to 3.3%, with core Consumer Price Index (CPI) potentially reaching 3.6%. Retail sales are expected to rise by 0.4%, continuing a positive trend despite ongoing muted consumer confidence.